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The Chinese telecommunications firm ZTE Technologies has agreed to pay a near record- bursting fine following a five-year investigation by the United States Justice Department. The Smart ZTE is one of the few Chinese corporations to make a major gain into U.S. markets capturing upwards of 11% of the U.S. smartphone market. ZTE agreed to plead guilty to violating U.S. sanctions against Iran, and obstructing federal investigations, and to pay a fine of $892 million. ZTE was accused of incorporating technology that originated in the U.S. while fulfilling infrastructure contracts in Iran with hundreds of millions of dollars, thereby violating U.S. sanctions.

Joining us today to talk about all of this is Bill Black. Bill is an Associate Professor of Economics and Law at the University of Missouri Kansas City. He’s also a white-collar criminologist and author of The Best Way to Rob a Bank is to Own One.

Thanks for joining us, Bill.

BILL BLACK: Thank you.

SHARMINI PERIES: So, Bill, before we get into all of this let’s listen to a newly minted Secretary of Commerce on the matter.

WILBUR ROSS: Improper trade games are over with. Those who flout our economic sanctions export control laws, and any other trade regimes will not go unpunished. They will suffer the harshest of consequences.

SHARMINI PERIES: Wilbur Ross. What do you make of the case and what Wilbur Ross is saying? And then the outcomes of this which is no one was really criminally prosecuted were they?

BILL BLACK: Right. So, the harshest of sanctions are zero prosecutions. So apparently, we have new facts and new definitions of what words like harsh mean. So, this is an institution that didn’t simply breach U.S. law to the tune of tens of millions of dollars, which is to say hundreds of separate felonies. But on top, of that engaged in incredible series of actions, not a single action, but many actions ordered from the highest level, executed at very high levels, to hide its violation.

And so, this involved numerous, again, dozens of additional felonies. In terms of false statements to the FBI and the Justice Department and Commerce, but also obstruction of justice. They had a whole group that cleansed their documents of incriminating documents. They had another group that auto-corrected deep honest information. So, this is an interesting concept of auto correct, right, to make them auto-incorrect. To hide and lie was this process.

Now, having been a Justice Department attorney for a while and working with them for many years, I can tell you that in the old days, even if it didn’t involve some international sanctions and threats to U.S. national security, the Justice Department would have been absolute death on this. There would have been criminal prosecutions of all of the top people. Its license would have been revoked to do business with U.S. materials, it would have gone into bankruptcy. That’s what harsh sanctions mean.

And notice that this is the ‘great devil’ from Donald Trump’s perspective. The folks that they were violating the sanctions with were Iranians. And this, according to Trump, is the ‘great foreign devil’ from our perspective, or the perspective of the administration. And you would have expected that they would have come down in the harshest possible way and demand the most extreme vetting and all that stuff that you hear in other contexts. But none of it. And what’s going on here?

Well, it turns out that Donald Trump has personally, in the past, said that we need to gut the Foreign Corrupt Practices Act because it makes it hard to compete abroad. We need to be able to bribe officials to violate their domestic laws. In other words, what this Chinese firm is being accused of doing is what Donald Trump says U.S. firms have to be able to do the reverse.

And Donald Trump has nominated for the head of the SEC, J. Clayton, who, when he was head of the infamous New York Bar, co-authored the paper demanding that we gut the Foreign Corrupt Practices Act because it supposedly was putting our domestic firms at a huge competitive disadvantage.

So, you can see they’re between a rock and a hard place. This is an administration that wants to encourage, literally wants to encourage corruption by U.S. firms and, therefore, knows that those U.S. firms could be charged under Chinese and Iranian law for violation of their laws so we don’t really want a terribly harsh penalty. Even if it involves the Chinese and the Iranians, which are supposedly devils one and two, in Donald Trump’s world view.

SHARMINI PERIES: All right, lots of material here for the show Billionaires, eh?

BILL BLACK: Oh, the billionaires are pikers. What criminologists know, is the secret to these really big frauds and corruption? It’s not genius, it’s audacity. And that’s what Trump and his crew of kleptocrats have. Just complete audacity. They’re willing to do this in the daylight and simply make up facts. Like this is the harshest possible penalty.

SHARMINI PERIES: Now, Bill, to be fair, let’s say that the Trump administration is new. They probably haven’t gotten their teeth into some of these issues at least, not so far, I mean the Justice Minister and others were just recently appointed, but do you think this is oversight on their part, this case? Or is it truly this is what they prefer in terms of the outcomes of these kinds of cases?

BILL BLACK: No. This is with his top team onboard. Commerce is Wilbur Ross. You know, the kleptocrat-in- chief. Oh, and did I mention, that the Secretary of State, the former head of Exxon personally, lobbied against the anti-corruption measures involving oil and gas extraction.

And that among the very first things that Donald Trump signed from Congress, maybe even the first thing he signed from Congress, was something to eliminate the SEC rule on those disclosures so that the Exxons of the world, and again, Tillerson came from running Exxon, would be able to pay those bribes without the public knowing how big they were and having a chance to prevent them.

SHARMINI PERIES: You would think this would have been an ideal opportunity, where Iran and China are involved, or a Chinese corporation is involved in this whole corruption scandal, and the Justice Department, and the Trump administration, could have really used this as a politically convenient case in point.

But they didn’t pursue that. Give us a sense of what you think those of us who want these kinds of cases properly dealt with and due criminal punishment properly applies, although a million dollars is hardly pocket change for them, give us a sense of what we could do in order to make sure that there’s due attention, at least public attention on these kinds of cases that are going on. Usually we just hear about the outcomes and never the process of these things unfolding?

BILL BLACK: Well, again, you’ve got to demand prosecutions. Again, here’s the danger. The default position, the normal thing the Justice Department would have done in a case like this – because of the five years of lying by the Chinese company, obstruction of justice, massive manipulation of documents to hide the truth – the normal position of the Justice Department – forget Iran, forget China – would have been all the top people go to prison and this place will go bankrupt. And here, on top of that, they had China in Iran.

Which should have been something that kicked it under Trump theories, viewpoints, into an ultra-high penalty case. And that’s telling you that even in these circumstances, where you should have seen the absolute most severe penalties, this administration is so oriented towards weakening laws against elite fraud and corruption, that they were absolutely unwilling to prosecute even the most minor employee in a Chinese firm, where you know the Chinese firm would have been happy to have several of their guys walk the plank in a prosecution, some minor-league employees.

And the Justice Department, with Commerce actively involved, Wilbur Ross, the closest of the kleptocrats to Trump on a personal basis, they were absolutely unwilling to prosecute.

SHARMINI PERIES: All right, Bill. We’re going to take another case up next week you. And that is the Baku case. And I thank you for joining us today and looking forward to having you back.

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